To set up a chloromethanes plant at Rs 600-crore investment

GACL, as part of its expansion drive, has been working on international tie-ups that can help the company to get access to closely-held energy-efficient technology and enhance its global brand.

Virendra Pandit

Ahmedabad, April 17

Dow Europe GmbH and State-promoted Gujarat Alkalies and Chemicals Ltd (GACL) on Wednesday announced the setting up of an environment-friendly chloromethanes plant at the latter’s Dahej Complex in Bharuch district with an investment of Rs 600 crore. Commercial production is expected to commence in 2011.

Pharma cos

Majority of the new facility’s products are targeted at the pharmaceutical industry and other related businesses in India itself. This translates into a potential saving of about Rs 200 crore in foreign exchange currently used by the Indian pharma industry to import chloromethanes.

The two companies signed a 50:50 joint venture agreement (JVA) here in the presence of the Gujarat Chief Minister Mr Narendra Modi for setting up the plant that would have a capacity of two lakh tonnes a year. “The joint venture will go a long way in strengthening Gujarat as a sustainable pioneer of chloromethanes product manufacturing and services,” he said.

Expansion drive

“GACL, as part of its expansion drive, has been working on international tie-ups that can help the company to get access to closely-held energy-efficient technology and enhance its global brand,” said Mr Guru Prasad Mohapatra. GACL is India’s leading chlor-alkali producer while Dow is the world’s leading producer of chemicals and plastics as well as supplier of chlorinated organic products and services. Dow currently produces nearly five lakh tonnes per annum (mta) of chloromethanes, mainly methylene chloride and chloroform, at its three locations in the US and Germany. GACL will supply 600 MT of chlorine per day to the new facility.

With this, Dow Europe GmbH, a wholly owned-subsidiary of the $54-billion The Dow Chemical Company, is making its biggest investment in India, Mr Michael R. Gambrell, Executive Vice-President Basic Chemicals and Plastics at Dow, told reporters. “We are working on the debt:equity component for the joint venture and it could be anywhere between 20-30 per cent equity and the rest as debt,” Mr Mohapatra said. Mr Gambrell said that other formalities would be completed by end-2008. The project is expected to be complete in 36 months’ time from then.

The plant would provide the much-needed boost to local pharmaceutical industry as they would be able to source chloromethanes directly from this plant, he said. Chloromethanes are used as an intermediate in the production of fluorocarbons and fluoro-polymers and as a solvent in pharmaceutical manufacturing, metal cleaning/degreasing, and other chemical processing applications.

While GACL would supply feedstock (chlorine), power and lease land to the joint venture, Dow will license its production technology and marketing and sales expertise. The joint venture also plans to market its products to South Asian Association for Regional Cooperation (SAARC) countries, i.e. Pakistan, Sri Lanka, Bangladesh, Nepal, Bhutan and Maldives, besides India. Mr Gambrell said that the total turnover of Dow in India is $500 million, and it plans to double in the next few years.

(This article was published in the Business Line print edition dated April 18, 2008)
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